Are all bank accounts insured by the FDIC?

Many people assume that all bank accounts are FDIC insured, sadly this is not the case. Likewise, not all money you deposit into an account with FDIC will be covered by the insurance. Accounts are generally insured for just the first $250,000 per account.

I don’t often recommend most people leave this kind of money sitting in a bank account. Especially with today’s low interest rates. If you must have this kind of cash sitting around, you may want to have accounts at more than one institution.

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Hi! Thanks for writing….good question, and the answers already given here are perfect. As the other advisors have written, if you keep money in a bank or credit union, you have Federal Depository Insurance Corporation (FDIC) or bank account insurance. This benefit insures up to $250,000 per owner against fraud, default, or bankruptcy by the bank.

As advisor Joseph Carbone writes, stocks and money market accounts are not insured by FDIC However, these are insured by the Securities Investor Protection Corporation (SIPC) up to $500,000 with specific requirements. SIPC insurance protects your investments from fraud or bankruptcy of the investment house that holds the investments, not the actual company you’ve invested in; it doesn’t insure against losses you were to incur because of errors or unfortunate decisions in your investment choices. For example, you were to use Etrade to buy shares of Nike stock and Etrade itself were to go bankrupt, SIPC insurance would help; if Nike were to go bankrupt, you’d lose all the money you’d invested.

The Federal Deposit Insurance Corporation (FDIC) is an independent agency of the U.S. government that protects you against loss of deposit if your bank is FDIC insured. Banks are not mandated to be FDIC insured, but being insured has become a point of competition among banking institutions. In other words, a bank that is not FDIC insured cannot compete effectively in an industry where consumers have come to expect their money to be protected. To see if your bank is FDIC insured, you can go to the FDIC Bank Find page.

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